Started LLC in December 2020 - Expenses Question

Forum|Forum|5 years ago
December 31, 2020
1 reply
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Hello,

I recently registered a single member LLC in December of 2020. However, I had business expenses all through 2020 prior to opening the LLC. Can I still claim those expenses against the LLC even though they were prior to LLC registration date?

Thanks!

M-MTax

Level 15

Before the business is open you can deduct start up costs and organizational costs.

Mike9241

Level 15

did you actually start your business in 2020 - do things to attract customers or anything else to indicate your business was open. start-up costs are not deductible until the year the business actually starts. did they exceed $50,000 because then you can not deduct them all? a portion would have to be amortized over 15 years starting with the year the business commenced.

Ac711Author

Level 2

The business is a racing team. I race autos and compete for money. I will be receiving a couple of 1099’s this year from sponsorships that I will need to claim as income.

I have quite of bit of expenses to net against my winnings (small) and sponsorship. The majority of these expenses are related to race fees, maintenance fees, gear, etc. However, I would claim a net loss this year.

I raced all through 2020 (first race in May) and registered the LLC in December. I just want to clarify if I can claim those expenses from the season against my sponsor money and winnings with the LLC?

If not, would I go the “hobby” route this year and just claim it on my personal taxes?

Please note it is a single member LLC, as I am the only member.